HomeMy WebLinkAboutSeptember 11Finance and Investment Committee Special Meeting
Town of Los Altos Hills
Town Hall, Monday, September 11, 2017
The meeting was called to order at 4:00 pm by Chairman Sloss.
Members present: Allan Epstein, Betty Kayton, Kjell Karlsson, Susan Mason, Stan Mok.
Bill Silver, Roddy Sloss and Chris Welborn
Members absent: Christopher Nam
Associate members: Jim Lai, present; Frank Lloyd, present
Council: Gary Waldeck, present; John Radford present
Staff present: Pak Lin, Administrative Services Director, Karen Huang, Finance
Manager, Tony Sandhu – Temporary Finance Consultant
Public present: None
Guests present: Izac Chyou, Senior Managing Consultant and Vincent Xiao, Analyst,
PFM Asset Management
Introduction of Tony Sandhu – Pak Lin / Roddy Sloss
Tony Sandhu will be working approximately half time on assigned projects during Pak Lin’s absence
from September 8, 2017 to January 2018. Tony has previously consulted for the Town and is a retired
finance officer of agencies similar to the Town in the San Francisco Bay Area.
Discussion of PFM Quarterly Investment Management Performance Report Prospective
Investment Strategy Changes and the Town’s Investment Policy - Izac Chyou
Mr. Chyou presented a handout distributed before the meeting and responded to questions. The Town’s
investments were in compliance with its Investment Policy. Market conditions, portfolio performance,
near term outlook and strategy were discussed including the June 30, 2017 portfolio value of $15.2
million, with an average market based yield of 1.44% and an average maturity of 1.9 years. For the June
30, 2017 ending year, overall portfolio performance resulted in a 0.16% pre-expenses return which is
slightly better than the Bank of America 1-3 year Treasury Index rate and was significantly affected by
mark to market losses on Treasury securities in the 3rd and 4th quarters of 2016 when performance was
substantially the same as the aforementioned reference rate. All members agreed increasing the
percentage of portfolio holdings in the municipal and corporate sectors is desirable as yields are favorable
to portfolio performance. Mr. Chyou stated that he would ask PFM’s traders to look for more securities
in those sectors for the Town’s portfolio. A discussion of adding Asset Backed Securities, Commercial
Paper rated consistent with other Corporate securities and AAA rated Super National Bonds (e.g. World
Bank and European Investment Bank bonds) concluded with the FIC recommending that Council act on
this change after Mr. Chyou presents a proposed revision to the Town’s Investment Policy describing
these changes including ratings, technical descriptions of the securities and maximum portfolio holding
percentages all consistent with California law. A summary of Mr. Chyou’s presentation was prepared by
staff to be presented in this month’s Council meeting and was distributed to the Committee.
Continued
September 11, 2017 FIC minutes, continued page 2.
Approval of minutes:
July 10, 2017 meeting minutes were approved as presented by members who attended that meeting.
Recommendation to establish a Section 115 Pension Trust and selection of a manager. – R Sloss
Copies of presentations by PFM and PARS, received in the April 3, 2017 meeting were handed out before
the meeting along with comparative summary prepared by R Sloss. After discussion, the Committee
unanimously recommended that a process be initiated to engage PARS to manage a section 115
Trust. Staff will prepare a Staff Report recommending approval for the October Council meeting.
Recommendations on investment policy and funding of the 115 Trust will follow.
Report on Council activities of interest – Gary Waldeck
Three ongoing matters were described; Organizational Assessment project recommendations, establishing
an exclusive Town postal ZIP code and reviewing a proposed Short Term Rental ordinance.
Also, Mr. Epstein presented a two page memorandum distributed before the meeting stressing the urgency
of initiating negotiations with Palo Alto and Los Altos to provide cost relief for treatment and conveyance
of sewer waste for FY2016-17, an estimated $100,000 to the Town’s sewer fund based on customer
winter season potable water usage data recently made available.
Report on Finance Department activities of interest – Karen Huang
Ms. Lin’s family leave began today and she will return in January. Ms. Huang will be taking a family
leave for the month of October. As previously noted Mr. Sandhu has been temporarily engaged and Ms.
Reed will be performing the Town’s Finance and Administrative affairs during these periods. Separation
of Duties type internal controls have been addressed by the staff for the periods affected by this staffing
changes and will be maintained during this period. The field work for the Town’s June 30, 2017 year end
audit is complete, a clean opinion is expected to issue and no formal internal control matters are being
raised. The CAFR preparation process has begun and a draft will be available to the Committee for
review by the end of the month. Bickmore has been engaged to prepare the OPEB bi-annual report which
is expected to issue in draft for the Committee’s review in October.
Review of future meeting calendar:
The next FIC meeting will be a Special Meeting on Wednesday, September 27, 2017 at 12:30 pm to
discuss the non recurring topic of the Bartel & Associates Report on prefunding pensions among other
things. Materials will be distributed prior to the meeting. Tentatively, a meeting to discuss investment
strategy with PARS for funding a 115 Pension Trust could be called on October 23 and CAFR Audit
review meeting could be called on November 13, 2017. A meeting to review the Bickmore OPEB report
has not yet been scheduled. Regular meetings in both October and November are cancelled.
Presentations from the floor – none.
Adjournment:
At approximately 6:00 pm there were no further matters to be discussed and the meeting adjourned.
Respectfully submitted by Roddy Sloss, Committee Secretary